FDIC Deposit Insurance

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Banks have paid $47.5 billion in FDIC assessments since the Deposit Insurance Fund went into deficit in 2009. These assessments, plus $13.0 billion recapture of over-reserving against bank failures and $7.8 billion of excess funds captured from the FDIC’s Temporary Liquidity Guarantee Program (which included both the Transactions Account Guarantee Program and the Debt Guarantee Program), brought the Fund balance to $35.7 billion as of March 2013, 0.59 percent of insured deposits. In addition, there was $2.7 billion in reserves against future bank failures.

On April 11, the FDIC updated its forecast for its Deposit Insurance Fund, substantially lowering the projected cost of bank failures over the next five years. Last October, the FDIC estimated that failures would cost $10 billion from 2012 through 2016. The revised forecast sees only $7 billion over this period, and $5 billion from 2013 through 2017.

Based on these figures, the FDIC expects the Fund to reach a 1.15 percent reserve ratio in 2018 and its 1.35 percent target by the Dodd-Frank Act deadline of third quarter of 2020. The Act mandates that premiums from banks larger than $10 billion will be responsible for bringing the fund from 1.15 percent to 1.35 percent.

In 2009, the FDIC required depository institutions to prepay 13 quarters of assessments, totaling $45.7 billion, to ensure the Fund had sufficient liquidity. The FDIC refunded excesses prepaid assessments on June 30.

Banks, not taxpayers, are entirely responsible for covering all of the FDIC’s expenses, including the recapitalization of the fund. In fact, banks have paid over $100 billion in assessments since the inception of the find, ensuring that no one has ever lost a penny of an insured deposit.